Freight Logistics Guide: What is Freight Shipping?

May 17, 2022
15 min read

This guide contains everything you need to know about freight shipping and logistics so you can make  informed decisions for your business. Learn the difference between LTL vs FTL, how to find the best rates, and what services to expect from a freight provider.

Table of Contents:

Navigating Freight for Your Business

What Is Freight Shipping?

What Is FTL Freight?

What Is LTL Freight?

LTL Freight vs. FTL Freight

Freight Shipping Rates

Freight Brokers vs. Freight Forwarders

How to Find a Freight Provider

Freight FAQs

Freight logistics is an essential part of any merchant’s supply chain. The importance of freight was thrown into focus during the recent supply chain disruptions, especially during the peak holiday season.

Due to capacity constraints, manufacturing delays, and equipment shortages, 19% of merchants were unsure if their inventory would arrive in time for holiday sales last year. A truck driver shortage and unprecedented levels of demand caused freight shipping rates to skyrocket, with 77% of merchants reporting that they felt the effects of increased freight rates last year.

All of this volatility led to an increased investment in supply chain management, from procurement to freight to final mile delivery. If you’re looking to better understand the role that freight plays in your end-to-end supply chain, this guide contains everything you need to know about freight shipping to make more informed decisions for your business. Learn the difference between LTL vs FTL, how to find the best rates, and what services to expect from a freight provider.

What is Freight Shipping?

Freight shipping refers to the movement of large or heavy shipments by truck (otherwise known as over-the-road, or OTR, shipping), rail, air, or ocean. Freight is primarily how merchants and retailers ship their products into storage facilities, fulfillment centers, and retail stores.

To qualify as freight, a shipment must weigh over 150 pounds or measure more than 30 in x 30 in x 30 in. Anything smaller should likely be sent as a parcel shipment for the best shipping rates.

eCommerce merchants shipping large products like exercise equipment and furniture have the unique challenge of finding a vendor that can make residential freight shipments. These large home deliveries often also come with an expectation for threshold or white glove delivery.

What is FTL Freight?

FTL freight stands for Full Truckload freight; it is also known as TL (Truckload) or OTR (over-the-road). It is a method of freight shipping that uses a 53’ semi-truck to transport products on surface roads. These shipments can cross state or country borders, and each truck can typically carry a maximum of 26 pallets.

A shipment is classified as FTL freight if the entire truck is filled with products from the same shipper – the shipment does not necessarily have to take up the “full truck”. FTL freight shipments have one dedicated driver and stay on the same truck until they arrive at their final destination.

FTL freight is the fastest trucking option, and estimated delivery times are very reliable, but tracking while in transit is rarely available. FTL shipments can also be expedited for an additional cost. This will often necessitate two drivers so one person can sleep while the other drives.

Because the driver, full truck, and all equipment is dedicated to a single shipper, FTL freight is typically the more expensive option.

What is LTL Freight?

LTL freight (or Less Than Truckload) is also transported on a  53’ semi-truck, but with shipments from multiple shippers on the same truck. This means that the price of the shipment is shared across multiple shippers, but it also means that the driver’s time and resources are split among them as well.

LTL freight networks are complex and require multiple touchpoints. This means there are more opportunities for shipments to be lost or damaged as they are transferred between trucks.

Delivery appointments are not standard for LTL but can be added for an additional fee, and tracking is provided and updated at each hub location.

LTL Freight vs. FTL Freight

With the recent volatility in the freight market – both in availability and pricing – you may be wondering when to choose LTL vs. FTL freight. Understanding the primary differences between the two may help you make a more informed decision.

The LTL market is a much more complex market with several different types of carriers that provide different services. There are seven main types of LTL carriers, all defined here by Coyote Logistics.

When to Choose LTL Freight?

LTL freight is only an option for smaller shipments – typically fewer than 12 pallets. It is usually the best option for shippers who have flexibility on their delivery times. If you’re inbounding products on a regular schedule and know you’re not at risk of stockouts or missing a deadline for a promotion, LTL freight could be a good option to lower your costs.

LTL shipments can also be delivered to residential addresses and can come with additional services like white glove delivery, threshold, and room of choice. With new threshold and white glove delivery options being offered by major retailers like Walmart and Amazon, more and more consumers are expecting these kinds of services for home delivery of big and bulky products.

When to Choose FTL Freight?

FTL freight is the only option for larger shipments – typically 12 pallets or more. However, it can also be the best option for smaller shipments in the following circumstances:

  • Delicate or high-value products that could be easily damaged in transit
  • A pre-scheduled pickup and/or delivery is necessary
  • Products need to be rushed to meet a deadline

Especially for shipments under 12 pallets, FTL should be considered a high-end service. With a dedicated driver and truck, as well as a direct route between the origin and destination points comes a higher price tag.

Freight Shipping Rates

Between high demand and a shortage of truck drivers, freight shipping rates have made their way even into mainstream media. Fluctuating diesel prices and ongoing supply chain volatility continue to make freight shipping rates difficult to predict, but understanding what factors affect those rates will help you make better decisions for your business.

LTL Freight Shipping Rates

LTL rates are spot rates – meaning they can change dramatically based on the current market demand. Changes in the market and price fluctuations can literally happen overnight, and rates are not locked in until a pickup is scheduled. 

LTL pricing is determined primarily by the product’s freight class. Freight class is a numerical classification set by The National Motor Freight Traffic Association (NMFTA) which rates product types from 50 (the least expensive) to 500 (the most expensive). Shipments are categorized according to:

  • Product type
  • Linear footage
  • Weight
  • Distance traveled

LTL freight rates are also affected by fuel surcharges. Fuel surcharges are set by The U.S. Department of Energy every Monday. The average price sets the standard for all freight shippers in the country.

FTL Freight Shipping Rates

FTL rates are simpler to calculate because they do not take freight class or product type into account. If the shipment can be covered by standard insurance and weighs less than 45,000 pounds, the product type does not affect the rate.

FTL rates can either be quoted as a price per mile or a flat door to door rate. While freight class does not affect FTL pricing, there are several variables that can cause prices to fluctuate, including:

  • Seasonality: the holiday peak season and produce seasons tend to be more expensive times to ship freight
  • Mileage and trucking lane: Total distance traveled does play a part in FTL rates, but shipping from one high-demand city to another will cost more per mile due to capacity constraints.
  • Timing/Urgency: If you have flexibility on your pickup and delivery dates, you can usually find a lower rate.
  • Pickup and dropoff location: Ease of access, scheduling, and equipment availability at the pickup and dropoff locations will affect FTL rates. Basically, the more difficult the locations are to access, the higher the rate will be.
  • Contract vs spot rates: Scheduling out and contracting regular FTL shipments gives carriers predictability, which is highly attractive and will often result in lower rates. Scheduling shipments last-minute will typically result in higher rates.

Freight Brokers vs. Freight Forwarders

Freight brokers and freight forwarders are sometimes referred to as “middle men,” but a partnership with a well-resourced freight broker or freight forwarder can ease a lot of operational burden, especially for small to mid-sized businesses (SMBs). 

At their core, freight brokers and freight forwarders both act as an intermediary between shippers and carriers. They negotiate rates, schedule pickups and deliveries, track the shipment on its journey, notify shippers of changes or delays in their shipments, and more.

Some freight brokers can also act as freight forwarders or even carriers, but there are some key differences between their functions.

What Is a Freight Broker?

A freight broker facilitates communication between a shipper and a freight carrier. They never actually take possession of the shipment. They simply manage the process with the actual carrier. They are asset-light, meaning they don’t actually own or operate any of the trucks or hire the drivers. They are usually technology-based solutions with a deep portfolio of reliable shippers to call on, enabling them to provide competitive rates, even when capacity is tight.

What Is a Freight Forwarder?

Freight forwarders also arrange freight transportation with third-party carriers. However, freight forwarders do actually take possession of the cargo to store, package, and consolidate it when necessary. Unlike freight brokers, freight forwarders can work across international borders for ground, ocean, ocean, or air freight shipments.

Because freight forwarders take possession of the products, often storing them in their own warehouses, they assume a greater liability than freight brokers do. They also package and can often consolidate shipments to negotiate better rates.

How to Find a Freight Provider

Ultimately, the same qualities that make a great freight provider also make a great warehousing, fulfillment, and delivery partner. In fact, segmenting your supply chain solutions among multiple partners can make internal processes unwieldy and inefficient. Streamlining your end-to-end supply chain through a single partner gives you greater control over your business.

An end-to-end supply chain solution will have a consolidated technology platform so you can track your inventory from the manufacturer to your end customer through one access point. You will also have one point of contact for questions or issues you may encounter along the way. This kind of partnership can simplify day-to-day operations, giving you back time and resources to invest back into other areas of your business.

Having a single provider will also give you visibility into your supply chain to more easily identify opportunities for greater efficiencies or cost savings. Your data is aggregated in a single platform and reporting system so that it tells more compelling stories about the effect your supply chain has on the entirety of your business.

If you’re looking for an end-to-end supply chain partner to simplify your business, reach out to one of our supply chain experts.

Freight FAQs

How much does freight shipping cost?

Freight shipping costs are determined by a variety of factors. LTL rates change quickly and often based on capacity (known as a spot market). LTL rates are determined primarily by freight class. FTL costs are often determined by cost per mile traveled. FTL rate quotes are more reliable, but will be more expensive than LTL rates on average. 

How long does freight shipping take?

Due to the complex nature of LTL networks, LTL shipments will take longer than FTL shipments and do not have scheduled delivery time. FTL shipments take a direct route from their origin to destination. Their delivery times can be limited by weather, traffic, and the number of hours the driver is legally allowed to drive at a time.

What is a freight handler?

Freight handlers do the heavy lifting of loading, unloading, packing, labeling, and consolidating freight along different steps of its journey. They are responsible for keeping records and ensuring the safety of goods as they travel through a freight network.

What is a freight dispatcher?

A freight dispatcher works on a freight carrier’s team to communicate with freight brokers and help drivers schedule their loads. They are essential for effectively managing shipments and ensuring on-time delivery.

What is multi modal?

Multimodal refers to different modes of transport along the same cargo route or within the same network. For example, a multimodal network may include ocean, air, rail, and over-the-road transportation.

What is transloading?

Common in long-haul containerized transportation, transloading is the process of transferring a shipment from one mode of transportation, such as an airplane or ship, to another, like truck or rail, to reach its end destination. Learn more about transloading services and the essential role they play during supply chain disruptions.

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